Eco-innovation: The Next Business Megatrend

Corporate sustainability is gathering momentum in North
America. Companies like Walmart and GE are indisputably proving the business
case for efficiency with an environmental slant, and unprecedented numbers of
corporations are jumping on the eco-efficiency bandwagon. Although it is still
early days, indicators are that this trend could become a megatrend,
influencing not only our economy, but our perspective on how companies should
behave.

As eco-efficiency gathers steam, however, we are seeing
signs of another trend on the horizon. Eco-innovation appears to be the next
iteration of eco-efficiency, but with greater potential for both brand and
revenue building.

Eco-innovation is, by definition, an application of
innovation to sustainable development. However, the essence of eco-innovation
is best revealed by juxtaposing it with eco-efficiency.

The two might be considered as evolutionary stages of
corporate sustainability. Eco-efficiency is, for a corporation, the perfect
introduction to sustainability thinking. It's low hanging fruit, and offers
almost immediate payback—which emboldens more green corporate action.
Eco-innovation, on the other hand, is the stage a corporation enters when it
has pushed eco-efficiency as far as possible. It's definitely fruit that's
higher up on the tree—harder to reach, but tastier for the effort.

You might also view the two as linear vs. lateral
thinking. Eco-efficiency is about discovering a source of inefficiency, then
trimming out the wasted resources, pollution, and energy. It's math, well
applied. Contrast that with eco-innovation, which relies more on invention,
creation and intuition. Like any other form of innovation, it can be wildly
successful when executed properly—but it doesn't offer the same degree of
certainty as efficiency.

Finally, you might look at eco-efficiency as a template
for savings, and eco-innovation as a route to strong brand growth. Indeed, the
power of eco-innovation is its capacity for constant reinvention, improvement
and iteration—the very lifeblood of a vital, dynamic brand.

If eco-efficiency is just now entering the mainstream of
corporate America, one would think that eco-innovation would be a far-off,
undeveloped, academic concept. Nothing could be further from the truth.

Two cases for eco-innovation

Domtar is North America's largest supplier of uncoated
paper. A progressive company, Domtar is actively engaged in eco-efficiency,
especially in the forest and at the mill site.

Lewis Fix, Domtar's VP of Brand Management and
Sustainable Product Development, notes that while the efficiencies have
delivered solid financial performance, they can't offset the decline in the
paper industry. As Fix explains, Domtar has responded by innovating beyond the
core business, into areas like:

* Energy-
The company has long used pulp byproducts to produce its own energy. But now,
Domtar is forming partnerships with energy companies to be part of their
renewable energy portfolio.

* Nanotechnology—The Domtar innovation that is
generating the most buzz today is the development of tree fiber-based
nanotechnologies. Minute "building block" nanomaterials derived from pulp are
being reassembled into new materials, revolutionizing applications like
iridescent films, coatings and bioplastics. Advantages like tensile strength
(ten times greater than steel) and electrical conductivity make these
nanomaterials a very attractive product—and an innovation that could move
Domtar into an entirely new realm of expertise.

Domtar provides a wonderful example of a large,
industry-leading company embracing eco-innovation to stay ahead of the curve.
On the other end of the spectrum, startups like Replenish are being launched
with eco-innovation built right into their DNA.

Replenish is bringing a radical new household cleaner
'delivery system' to market in October. According to Jason Foster, CEO at
Replenish, it's an innovation that was conceived with both practical and
sustainable considerations.

Foster says the idea for the innovative bottle and
concentrated liquid cleaner came to him when he considered both the insanity of
shipping bottles full of diluted cleaner around the world, and the
impracticality of current concentrate systems.

Foster realized the key to improvement lay in bottle
design. It was an area sorely lacking in innovation—the spray head and bottle
design in use today was essentially the same as the one designed by Roger
Drackett in 1943.

Instead of endeavoring to make the existing bottle
eco-efficient (or "less bad," as Foster says), Replenish created an entirely
new bottle based on cradle to cradle design.

The result? A reusable bottle system that uses 90% less
plastic, 90% less oil and 90% less CO2 than the old system. As Foster says,
Replenish ships utility, not water. And that utility results in both
environmental and financial benefit.

Tips for launching your eco-innovation

Althought eco-innovation is still new, conversations with
companies like Domtar and Replenish highlight some key learnings in "getting it
right." The following thoughtstarters provide great guidelines for anyone
exploring eco-innovation

First, think outside the jar. This discipline actually
applies to all innovation. If you're too deep inside the brain space of your
company, you'll be able to give a million reasons why a new idea WON'T work. To
embrace a new, potentially great idea, you need to step outside this limiting
thinking, and see your company as a consumer would—from the outside.

Next, think beyond Eco. Nike did just that when they
created their new Air Jordan shoe They incorporated incredible eco-innovation,
but positioned the shoe not as eco, but as pure, Nike technology. How can
eco-innovation help unleash thinking that might benefit you beyond the
bailiwick of sustainability?

Collaborate and tap your network. Often, the best
innovation comes from two things that don't seem to fit—like chocolate and
peanut butter. But collaboration, often between the unlikeliest of partners —
is what's driving eco-innovation forward at breakneck speed. We're already
seeing companies—using tools like the GreenXchange—share their IP to
accelerate their eco-innovation.

At the same time, tapping your company's collective
genius—from suppliers to employees to stakeholders—will drive
eco-innovation.

Be transparent. Sustainability is a journey that never
ends. That means you need to be very transparent about all the things you still
need to address—in addition to celebrating the things you're getting right.
Be open, be transparent, and invite constructive critique. It'll make your
product better, and win you stronger support.

Make many small bets, instead of one big one. The ideal
innovation portfolio is spread between four areas—far-off R&D,
fast-failing exploratory innovations, enhancements of current platforms, and
necessary strides forward to stay relevant. You should have a blend of all four
in your innovation pipeline. But most important, you should never bet the ranch
on one idea.

Make eco-innovation core to everyone's success. In the
past, we've seen companies create green teams, or bring in a Chief
Sustainability Officer. That turns sustainability into something that isn't
core—it's a "bolt-on." Companies like Patagonia and Seventh Generation don't
think that way. Everyone, from the C-Suite on down, has sustainability in their
job description. And they're measured on the eco-ideas they bring to the table.

Get innovation discipline. Everyone has great ideas. But
those ideas fail, unless they answer an unmet need, come from a real insight,
are interpreted the right way, and are presented in a way that your target
audience can relate to.

And finally, let your innovation be guided by the north
star of sustainability. As long as you never lose sight of your mission—to
profitably create a world where we can live with abundance, without depleting
the resources of future generations, your innovations will stay on mission.